Small On-Line Services Multiply
Well-known computer on-line services such as Prodigy attract millions of users, but now niche services are jumping on the bandwagon
ON-LINE services are proliferating, yet this lucrative field still has plenty of room for newcomers, according to one of the leaders in the business.Skip to next paragraph
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``There are all kinds of opportunities to build on-line services,'' says David Brown, chairman of Telescan Inc. in Houston. ``I'm not going to tell you which ones I'm thinking of because I want to be first.''
Mr. Brown has already built Telescan into a business with sales of $1 million a month. Its 100,000 subscribers use the service to help them select, analyze, and buy 300,000 securities at 48 stock exchanges worldwide. Telescan also provides the text of analyst reports, press releases, legal filings, and 34 news services.
Niche services such as Telescan differ from consumer-oriented services such as Prodigy or America Online, which aim to attract millions of subscribers.
Brown says he considers only 20,000 of his subscribers to be ``serious,'' meaning they spend about $50 a month with Telescan. He adds that he could have 250,000 serious subscribers within five years; Telescan also could have services priced to reach two other kinds of users - casual users, who would spend $10 a month, and professional users, who would spend $2,000 and up. Each market could eventually be worth $75 million in annual revenue, Brown says.
``It's an outstanding business,'' he adds. And no niche is too obscure to be served. Rare coins? An electronic bulletin board service earns $2 million a year by keeping collectors informed, Brown says. Telescan offers other on-line services in conjunction with the American Institute of Architects, Billboard magazine, Editor & Publisher magazine, and others.
By the end of the year, Telescan will market software (presently code-named Sunflower) that will allow buyers ``within hours'' to create their own on-line services. Telescan's computers will act as the host system for these services. The creators will control updates, access, and cost; Telescan will handle billing.
Although their target audience is smaller, niche services are able to turn a profit faster because they can get started faster, says Michael Mead, president of Entrepreneurs Online in Houston. His service focuses on helping start-up businesses. Another niche service, NationBase, was introduced last month at the National Conference of State Legislatures convention. NationBase provides current information on the progress of legislation and regulations in all 50 states and in the federal government, including the full texts.
Gavin Clarkson, chief executive officer of NationBase, says the service will help ``anybody whose life or livelihood is affected by the government,'' such as highly regulated industries or issue-advocacy groups. The service includes Legislative Management System software, which allows users to manipulate the data and add confidential information such as fiscal impact or political commentary.
Mr. Clarkson says he never intended to be in the on-line business. His software has been in use for eight years, he says. But his customers had to obtain the information from state agencies or other providers who often didn't perform well. ``The tools were better than the data delivery system,'' he recalls. ``So I saw an opportunity there.''